SYDNEY Saputo Inc (SAP.TO), Canada's largest dairy producer, looked likely to triumph in the battle for Australia's Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB) WCB.AX after hiking its bid by 14 percent to A$449 million ($430 million).
Saputo's A$8 per share offer trumps separate approaches from WCB's two largest shareholders, Australian-based Bega Cheese Ltd (BGA.AX) and Murray Goulburn Co-operative Co Ltd, and won a recommendation from WCB's directors.
"It's very close to what must be the final bid," said Mark Topy, senior industrials analyst at Canaccord Genuity, who expects Bega and Murray Goulburn to bow out of the battle.
"Price is almost immaterial for (Saputo) and they've got the most firepower."
Australian dairy and farm assets are attracting increased interest as companies ramp up their exposure to Asia's growing appetite for milk, cheese and other food products.
WCB shares, already trading above the new offer price, were on a delayed start on Friday, having closed at A$8.15 on Thursday.
After a series of takeovers in the Australian agribusines sector, Bega and Murray Goulburn have promoted their offers as keeping assets in Australian hands.
Saputo has highlighted its global ambitions and its ability to encourage competition for farmer milk supplies.
"We know how important competition is for milk producers. Saputo does not currently have a business in Australia, so Saputo's arrival in Australia will not reduce competition," Instead, we will ensure WCB is well-financed and remains a vibrant competitor," Saputo Chief Executive Lino A. Saputo, Jr said in a statement.
Saputo will have to win approval from the Foreign Investment Review Board.
In terms of competition regulators beyond Australia, Topy said the combined businesses would still be a small player compared to New Zealand's Fonterra (FSF.NZ).
"In fact, it will increase competition because Fonterra's been so dominant in a lot of export markets," he said.
Saputo's bid tops the A$7.50 per share approach from Murray Goulburn, which owns about 17 percent of WCB, and a A$5.78 per share offer from top shareholder Bega a month ago that kicked off the takeover battle. The stock traded at A$4.51 before the initial Bega approach.
The offer allows WCB to pay fully franked dividends worth up to a further 56 cents per share of value. ($1 = 1.0426 Australian dollars)
(Reporting by Lincoln Feast and Jackie Range; Editing by Dan Grebler and Edwina Gibbs)